Enabling paperless banking in India, the Reserve Bank of India (RBI) has recently permitted using Video KYC as a means of remote customer verification in the banking and financial services sector. After Aadhaar enabled e-KYC was discontinued by the Supreme Court from being used for establishing the identity of customers, the financial services sector found it difficult to expand their reach. The non-banking firms which aimed to reach rural India’s unbanked population were also in a state of flux, with physical KYC as the only means of establishing a customer’s identity.
In a welcome move, the RBI has recently permitted using Video KYC as a means of remote customer verification in the banking and financial services sector. This would prove to be a boon for those interested in sharing Digital India’s benefits with those who are yet to be covered under Aadhaar enabled e-KYC. The financial services sector, especially the NBFCs, the PPIs and small fintech companies running on shoe-string budgets found it difficult to expand their reach. The non-banking firms which aimed to reach rural India’s unbanked population were also in a state of flux, with physical KYC as the only means of establishing a customer’s identity. Even the relatively convenient wallet companies could conduct KYC only for accounts to a limit of INR 10000.
The Reserve Bank of India announces a new step towards paperless banking. With the aim of enhancing customer convenience and improving the KYC process, RBI has introduced “Voter ID Based e-KYC service” as an alternative to physical KYC. This initiative has been taken in tandem with UIDAI (Unique Identification Authority of India). The service will enable banks and non-bank entities serving to meet their customers on a real-time basis while ensuring complete security of their data.
Paperless banking accounts provide convenient and secure access to your funds through a mobile application or online banking platform, removing the need for physical transaction details. The onus of maintaining the process’ integrity, however, remains solely with regulatory authorities such as the Reserve Bank of India (RBI). This can be done through training RBI agents and keeping records in line with RBI recommendations. Activity logs must also be maintained if video KYC is performed.
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